Buy ISGEC Heavy Engineering; tgt Rs 11445: Sunidhi Sec

Brokerage house Sunidhi Securities is bullish on ISGEC Heavy Engineering and has recommended buy rating on the stock with a target price of Rs 11445 in its research report dated April 06, 2015.

July 31, 2015 / 17:36 IST

26 Aug, 2025 12:21

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Sunidhi Securities’ report on ISGEC Heavy Engineering

“Isgec has its origins in the Saraswati Sugar Mills, which were established 1933, with a sugarcane crushing capacity of 400 tonnes per day. It has grown into one of India's largest sugar mills and now crushes 13,000 tonnes per day. It is today a subsidiary company. At the time of the nation's independence, the need for an Indian capital goods industry was recognized and Isgec was established in 1946. The initial activity was the manufacture of spares for sugar mills. In the course of its history, the company diversified into a range of engineering products. Isgec’s business activities span across Process Equipment, EPC Power Plants, Boilers, Sugar Plants & Machinery, Mechanical & Hydraulic Presses, Steel & Iron Castings, Contract Manufacturing, and Trading. The heavy engineering equipments are used in power, cement, automobile, sugar, chemical, steel & alloy casting, oil & gas, pumps & valves, fertilizer industries and defence sector.”

“During Q3FY15, standalone net profit rose 116% to `37.5 crore on 42% higher sales of During Q3FY15, standalone sales rose 116% to `789 crore. Q3FY15 standalone EPS stands at `51. During 9MFY15, standalone net profit climbed 58% to `103.9 crore on 28% increased sales of `2366 crore. 9MFY15 standalone EPS works out to `140. The financial results for FY14 were for six months. During this period, sales stood at `1710 crore, which reflects an increase of 15% on an annualised basis. Net profit for the same period stood at `42.2 crore, which reflected an increase of 3% on an annualised basis. Annualised consolidated EPS worked out to `114. Equity capital is `7.4 crore. With reserves of `743.8 crore, the book value of the share is `1015. With short term and long term borrowings of `481 crore, the DER works out to 0.64:1 as at FY14. Cash, current investments and short term loans etc are `813 crore. (`1098/share).”

“Due to the economic slowdown, some segments of Isgec have large under-utilized capacities and improving business climate would thereby lead to highly profitable operational leverage. Based on the going, Isgec is expected to report an EPS of `290 in FY16 &, which would further go up to `382 in FY17 after the JV will start contributing heavily to the bottom line. At the current market price of `5995 crore, the share is traded at a forward P/E of 20.7x on FY16E and P/E of 15.7x on FY17E. The reasonable P/E of 30 as it applies to blue chip companies will take the share price to `8700 in the medium term and further to `11445 thereafter on FY17E. This is expected to fetch a decent gain of 90 per cent”, says Sunidhi Securities’ research report.

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